Robert Owusu’s thoughts: Overcoming job insecurity in times of global recession

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Employees attach value to their job features/total job, and when they perceive threats to these and experience feelings of powerlessness, their level of job insecurity increases (Hartley et al. 1991). Working life has been subjected to dramatic change over the past decades as a result of economic recession, advances in information technology, industrial restructuring and accelerated global competition. As a consequence, organizations have been forced to engage in various adaptive strategies in order to tackle new demands and remain vigorous in this unpredictable environment. They have options to become more profitable; they can either increase their gains or decrease their costs, often by reducing the number of employees.

These organizational options often surface in actions like outsourcing and privatizations, in combination with personal reductions through layoffs, offers of early retirement and increased utilization of sub-contracted workers. These changes have impacted tremendously on organizational structures and have created a continuous need for organizational changes in terms of retrenchments, rightsizing, mergers, acquisitions and downsizing. As a result of these changes, job insecurity in times of the global pandemic – covid 19, has emerged as one of the most important issues in working life and has brought the issue of insecure working condition to the forefront. Employment security is about the protection of workers against fluctuations in earned income as a result of job loss. Hence as the coronavirus continues to spread around the world, it is abundantly clear that the global economy is entering a recession.

 What is job insecurity

Job insecurity refers to the anticipation of this stressful event in such a way that, the nature and continued existence of one’s job are perceived to be at risk. It is the “phobia” or fear of losing one’s job (IGI Global). Although there are variations between different definitions, the underlying team behind the various definitions is that, job insecurity is a subjective phenomenon that is based on the individual’s perceptions and interpretations of the immediate work environment.

The subjectivity stems from the insecurity surrounding the future as insecure employees don’t know if they will remain in their positions or lose it, and hence might struggle between having to plan for a future within their current organization or preparing to seek employment elsewhere.

In other words, it is a sense of powerlessness to maintain desired continuity in a threatened environment, significantly and negatively related to job and organizational attitudes, to mental and physical health which has a negative effect on work performance.

Causes behind job insecurity

The prime causes behind job insecurity include:-

  1. ECONOMIC REASONS

Firstly, there are economic reasons behind the creating of this “corporate vacuum”. Many people lose their jobs as a result of global recession. Those who managed to survive underwent a thorough mental anxiety.

  1. PRIVATIZATION

Many government organizations decide to opt for privatization. It is a common belief among the government servants, that, private institutions or organizations emphasize on their profits and turnover compared to the well-being of their employees, which even include the shedding of unwanted work-force, for however, trivial reasons. Efficiency and accountability become the only criteria of survival.

  1. AUTOMATION/TECHNOLOGY

With modernization of the workplaces, the fear of losing out to fresh employees is alarming. Young persons are more adaptive to the present day technology like computers, while their senior colleagues feel uncomfortable to cope with the recent discoveries of mankind, thereby, adding to their fear – psychosis.

  1. NEW MANAGEMENT OR EXPERTS

Some organizations believe in shaking up the employees from time to time so that they do not become complacent. A new team is appointed to increase the efficiency levels of the employees and the productivity of the company. To achieve better results, the first thing a manager does is terminate the employment of those employees, which he considers is of no use to the company.

This is also the case with external consultants who are brought in to make favorable changes for the business entity. Both the new management team and the external experts are a serious threat to the job security of an employee.

  1. FEW OPPORTUNITIES AND RESPONSIBILITIES.

If an employee is not picked up for good projects or he is unable to make a distinct mark in the current project, then the chances are high that he is under the scanner. In such cases, the management keeps a close watch on his workings and dealings and if it finds that it is not worthwhile to keep the employee then gradually his responsibilities will be distributed amongst the ones that the company finds suitable. This is a sure threat and if the employee does not buckle up at this point, then eventually it would become a case of terminating the employment.

  1. MERGER AND ACQUISITIONS

Stiff competition in markets or some internal factors can force a business entity to look for a merger that can help it to come out of some serious financial trouble. It is unable to hold on to its current status and the merger seems like the best option at this point. Job loss is one of the first casualties of a merger as the employment of several employees is terminated to make way for those the company deems suitable. This is also done to avoid duplication but who can explain it to the employee who faces the threat of termination. Even in case of acquisition, several employees lose their jobs because the management prefers to appoint others in their place.

  1. GLOBALIZATION

Globalization has made it easier for companies to outsource resources that they think will prove a boon for their companies. Firms can hire human resources from several countries where labour is considered cheap when compared with other countries.

If any organization is looking for human resources from such countries, then your job security is not so great because the firm has the option of replacing you with another employee who will not prove as costly as hiring you has been.

Warning signs that your job is in jeopardy

There are various signs of job insecurity, and you need to be very careful while identifying them. You have to be able to see these signs, verify them, understand what they mean, and decide if they need to be addressed and if yes, then how to address them.

Job insecurity is a cause for concern, but at the same time, it can be a new opportunity as well. Therefore, it entirely depends on an individual, how he takes it and what he makes of it.

The following are some of the warning signs that your job is in jeopardy:-

  • Your team size is reduced and you are asked to manage with few number.
  • Some of your task are assigned to peers or subordinates.
  • Your profile is entirely changed without any satisfactory justification.
  • You were not given the increment and or bonus promised to you, while others got pretty decent hike.
  • The rumor mill is turning. Rarely do layoffs or firings come without warning. There are often clues and those clues can get the rumor mill going. If you start to hear rumblings of issues both in your department and elsewhere, it’s best to keep your ear to the ground and pay attention. Rumors don’t necessarily mean that your specific job is in jeopardy, but it’s best to be prepared.
  • Company-wide freezes. Another sign of trouble ahead is a freeze on hiring, as well as freezes or reductions in allowances or salaries. If positions are going unfilled, that’s usually, a sign that big changes are coming and there could be some changes to staff.
  • Reduce communication. Is your boss suddenly in a lot of closed door meetings and closed-lipped about what’s going on? Is information that was previously, easily accessed suddenly hard to find or not available.
  • Expenses are scrutinized. A sudden new focus on expenses and a level of scrutiny that you have never experienced before is potentially a sign of a financial issue that could affect your standing. It might simply be a reaction to suspected abuse of the system, or it could be a sign of bigger problems.

 

Impact of job insecurity

NEGATIVE IMPACT

Losing one’s job has serious economic consequences on the person, and consequently employees who face the prospect of job loss may also experience much ambiguity and uncertainty about losing these economic privileges and stability. Workers who face an uncertain future may not be able to effectively cope with the situation which leads to experiencing a higher level of stress. As a result, there is strong research evidence indicating that job insecurity is associated with a number of both physical and mental issues.

Beyond the negatively associated health outcomes, job insecurity has been linked to issues related to productivity and turnover; although the nature of this relationship is less clear. The increased ambiguity and lack of control has been observed to have a psychological toll on those who perceive job insecurity. The stress and anxiety associated with job insecurity can lead to biological regulation of the release of stress hormones being disrupted, jeopardizing the body’s immune system, and affecting the health and well-being of workers.

Numerous studies have found negative relationship between job insecurity and job satisfaction (i.e. as job insecurity increases, this is associated to an overall decrease in job satisfaction).

POSITIVE IMPACT

However, there is also evidence that job insecurity is linked to improved productivity. This is explained by employees working harder in order to stand out from their colleagues, and trying to increase their value to the organization. Further evidence of this is seen by the reduction in short term sickness absence amongst employees who have high job insecurity as they seek to demonstrate their commitment to the cause.

What is job security? 

Job security is an assurance that an individual will keep his or her job without the risk of becoming unemployed (Source: Law and legal definition). An employee will have continuity in employment and it may be from the terms of a contract of employment, collective bargaining agreement or labour legislation that prevents arbitrary termination.

Job security may also depend on economy, prevailing business conditions and the individual personal capacity.

Why job security matters

Job security matters a great deal to an employee no doubt, but it is equally essential for the employer.

  • EMPLOYEE PERSPECTIVE

From the point of view of an employee, job security means steady income, no worries of any financial hit and no anxiety about debts and bills at the end of the month. Increased stress hurts efficiency and productivity and can often result in several side effects like depression and reduced self-esteem. No one wants to be in a job where he has to tread carefully and is unable to express his views. Job security provides the employee with a sense of security and increased confidence that result in better productivity. Job security creates loyalty and a desire to be the best and the company, in turn, gains a hardworking and committed employee. Job security is critical for an employee as it gives him stability in both personal and professional life. It boosts his self-confidence and increases his productivity. The employee who is secured in his job can plan and ensure that in case of a job loss, he will not have to suffer too much of financial difficulty.

  • EMPLOYER PERSPECTIVE

In the case of the employer, creating a sense of security for employees is one of the best ways that companies cannot only attract and retain talents, but also ensure that they are getting the best possible work from their people. With so much competition on the market your business cannot afford to spend heaps of money on recruitment.

It will be costly to replace just an employee and most of this is spent on a lowered rate of productivity. It can take more time to get an employee trained up to standard and performing to your company’s standards. Imagine how much money you could lose if you need to replace two, three or even more employees in a year. When you have a team of employees who stick together for a long time, they are far more likely to work on dynamic new projects and create innovation. Lifelong friendships are formed, strong bonds and connections are created, and a strong sense of corporate culture is bolstered.

In addition, job security for employees improves company reputation. While you might think that providing job security is only important because it increases company bottom-line and improves productivity, this is not the case.  It is important for many other reasons namely that boosts company reputation as a good employer. When the top talent in your field is looking for a new job opportunity, they are likely to leaf through lists of the best employers in the country before deciding who to approach. Employing the top talent in your industry can be the difference between sinking and swimming in the future – the importance of the right employees cannot be overstated.

It is not only those looking for a new job that might be looking through those lists. Clients place more of an emphasis than ever on walking with ethical companies, and they want to know that you treat your employees with dignity and respect. They will peruse through the annual rankings of top employers when they are choosing who to work with. Will you make the grade?

However, in spite of the relevance of the above-mentioned factors, employers are cautioned not to hang onto dead weight.  By this it means, employers should not put up with substandard behaviour just to prevent employees leaving. Poor performance should not be tolerated, bad results or missed targets just for the sake of retention.  

Job insecurity during a recession

   WHAT IS A RECESSION

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in GDP, employment, real income, industrial production and wholesale-retail sales ( Source: National Bureau of Economic Research – NBER). In other words, a recession is the length of time that a country, region or the world is shrinking, rather than growing.

While recessions are hard to quantify, typically economists peg a recession as two or more consecutive quarters of a negative growth rate of GDP (Which is the total value of everything that the country produces (Source: Bureau of Economic Analysis – BEA).

Characteristics of a recession

A recession occurs when there is a wide spread drop in public spending, and is triggered by events such as:-

  • Financial crisis.
  • Slowdown of GDP (especially when GDP is below 2% for two quarters).
  • External trade shock.
  • An adverse supply shock.
  • The bursting of an economic bubble.
  • Global pandemic.
  • Real estate value and sales fall.
  • Loss of consumer confidence
  • Unemployment spikes.
  • Bank credit and loans are difficult to come by, particularly, for small business owners and entrepreneurs.
  • Increased government borrowing.

Impact of a recession

An economic downturn can be devastating for the economy, businesses and personal lives, and of course, the two are intertwined.

BUSINESS IMPACT

Businesses of all sizes are impacted by recessions, but larger ones are in a better position to survive. Costs have to be cut across the business, from marketing to research and development (R & D) to the amount being spent on equipment. If they avoid redundancies or cutting jobs, then they usually at least put the brakes on hiring any new staff. They become less willing to invest for the long term which can come back to bite them later in life, and postpone the launch of new products or ideas.

Businesses obviously grow when the economy is in good shape, but may simply end up unwinding previous growth after realizing how bloated and inefficient they are during a downturn. Firms will see a fall in demand and lower profits. Some firms may start to make losses and go bankrupt. If a company has large reserves then it will be able to ride out the recession even if it makes a temporary loss. A recession may cause a firm to pursue price wars and cost-cutting.

In respect of price wars, firms often seek to hang onto market share. This leads to aggressive price cuts, which further reduce the profitability of the business. Cost-cutting is where companies will be forced to look closely at reducing costs and may be closing unprofitable areas of the business. Companies may be forced to lay off staff in an effort to reduce costs. However, in spite of the above-mentioned negative impacts, there are potential positive effects of a recession. For example, the collapse in Chinese manufacturing in early 2020 as a result of the COVID-19, led to a sharp fall in air pollution. In addition, organizations are compelled by the situation to be innovative and by adopting new strategies and diverting into new areas operation.

INDIVIDUAL IMPACT (PERSONAL LIVE)

The livelihood of all those associated employees are then affected, which can shake their confidence. Unemployment can leave lasting negative impacts. Firstly, unemployment is very stressful and can damage a person’s morale and even health. Areas of high unemployment tend to experience more social problems. High unemployment can be a factor in creating social instability, leading to problems such as riots and vandalism. Mass unemployment can threaten the social fabric of the country.

The unemployed lose the opportunity to gain skills and on-the-job training. Long-term unemployment can make it difficult for the employee to gain a job in the future. It can even cause people to give up and drop out of the labour market completely. Unemployment and recession can also cause a rise in social/health problems such as depression and suicide.

We are seeing some of these effects already as a result of the coronavirus outbreak. Businesses are shutting down (some temporary), millions of workers are being paid off from full-time or losing contract work.

IMPACT ON THE ECONOMY

The impact of a recession on an economy is what Ghana began to experience from March 2020 as a result of the coronavirus pandemic. The economic and social impact of COVID-19 on the Ghanaian economy cannot be overemphasized.

These include the following:-

  • Increase in health and its related expenditure.
  • Short fall in petroleum receipts to Ghana.
  • Reduction in tax revenue.
  • Reduction in hotel occupancy rates.
  • Unemployment from staff layoffs.
  • Slowdown of Foreign Direct Investment (FDI).
  • Reduction in trade volumes and values (both Domestic and International).
  • Decline in international price of crude oil.
  • Exchange rate volatility and debt service difficulties.
  • Reduction in GDP growth.

(Source: Ministry of Finance website/Business Leader Magazine/Ghanaian Times March, 2020).

In an attempt to reduce the negative economic and social impact of COVID-19, stimulus packages were put forward by various governments including Ghana government. The stimulus package is a number of economic measures put together by a government to stimulate a struggle economy. In other words, stimulus package is a coordinated effort to increase government spending and lower taxes and interest rates in order to stimulate an economy out of recession.

The objective of this stimulus packages is to revitalize the economy and prevent or reverse recession by boosting employment and spending. In order to stimulate the economy out of a recession or depression, the Ghana government introduced the following stimulus packages:-

  • The establishment of a covid 19 Alleviation Programme (CAP) to protect job losses and livelihoods as well as support small businesses.
  • Covid 19 National Trust Fund to help alleviate negative impact of covid 19.
  • GHS 600 million for Small and Medium Enterprises (SMEs).
  • Distribution of food items to needy, individuals and households affected by lockdown.
  • Lower the CAP of the Ghana Stabilization Fund (GSF).
  • Arranged with Bank of Ghana to defer interest payments on non-marketable instrument estimated at GHS 1,222.8 million to 2022 and beyond.
  • Secured World Bank DPO of GHS 1,716 million and IMF Rapid Credit Facility of GHS 3,145 million.
  • Reduced the proportion of Net Carried and Participating interest due GNPC from 30% to 15%.
  • Amend the PRMA to allow a withdrawal from the Ghana Heritage Fund to undertake urgent expenditures in relation to the covid 19 pandemic.
  • A syndicate facility of GHS 3.0 billion to support industry especially in the pharmaceutical, hospitality, service and manufacturing sectors.
  • A call on the pension funds and other assets managers and investors to follow the leads of the banks to support by accepting a 200 bps reduction on short term instruments including Treasury bills and 364-day paper.
  • Engaging the Telecos to reduce the cost of data and telecommunication services to households and small businesses.
  • Tax grants and loans, the Ghana Revenue Authority (GRA) to provide some tax reliefs to businesses and households.
  • Bank of Ghana reduces monetary policy rate by 150 basis points to 14.5%.
  • Bank of Ghana Primary Reserve Requirement reduced from 10% to 8% to provide more liquidity to banks to support crucial sectors of the economy.

Steps to improve your job security

  1. KNOW HOW TO COMMUNICATE WITH YOUR MANAGER

Having unclogged clear lines of communication with your manager will help prevent any small issues from developing into larger career-ending problems. In line with this, know which mode of communication is most preferable for your manager. Are they more comfortable with e-mail or in-person? How often do they want to hear about project progress? When possible, adapt your mode of communication to fit with their preference.

  1. UNDERSTAND MANAGER AND COMPANY GOALS

Making yourself into an indispensable member of a team means proactively addressing problems. If you can come up with a solution to a problem or a new way to address a stated goal, then that’s one less thing for your supervisor to think about. Try and stay ahead of issues, and bring your polished ideas to your manager if you believe they can be helpful targets just for the sake of retention.

While you can try to hire only the best of the best, this is not always possible. Some individuals slip through and end up coasting on your good graces. Don’t be afraid to let them go for the sake of the greater good. If a company want to do its best and achieve its long term goal, it needs to have the right people on its team.

  1. STAY ON TOP OF COMMITMENTS

Everyone will let something slip professionally at one point or the other. The hope, however, is to stay on top of commitments and projects as much as possible. Try not to let anything fall through the cracks, and be willing to own up when you do. If you run into problems with any given project, allow yourself to ask for help early on rather than let the problem fester and turn into an enormous issue.

  1. STAND OUT

Try to produce work that goes beyond the minimum requirements. If you want to be recognized for your superior performance, then make sure you are giving your best effort on every (or nearly every) project that comes your way. Approach the task early on, think through the best way to address it, and consider new ways you could apply a solution in the future. Put forth your best effort when you want to be recognized for a good job.

  1. USE YOUR EXPERTISE

Everyone has things at which they excel. Some people are excellent writers. Others are good at unraveling problems or looking at things from a big-picture perspective. Others are excellent public speakers and still others can develop a presentation to knock your socks off.

Find your expertise and then find ways to show it off. If you don’t feel you have expertise in an area, then pick something you enjoy doing in your position and become an expert. You can always learn new skills, if you put your mind on it.

  1. GROW YOUR SKILL SET

I’m a big proponent of life-long learning, and I truly believe that, being a life-long learner will help develop professionally more effectively than many other things. As your career develops, so too should your skill set. Develop your skills both in and out of the workplace, by taking classes, practicing new skills and dusting off old ones.

  1. BE RESILIENT, ADATABLE, FLEXIBLE AND THOUGHTFUL

These are four skills organizations value most, regardless of role. “They actually spell RAFT, so that makes it easy to remember and visualize yourself always being equipped to sail in rough waters”. To be able to handle the challenges of these current times, you should be able to demonstrate:-

  • Resilience: – Bouncing back in tough times.
  • Adaptability: – Adjusting to novel environments.
  • Flexibility: – Being able and willing to wear different hats.
  • Thoughtfulness: – Being respectful, intentional, and communicative with colleagues.

If you can demonstrate all the above-mentioned characteristics to your manager, teammates and coworkers across the organization, you will become known as someone who can take on anything as well as an excellent colleague no one would want to path with.

  1. KEEP ON NEGTWORKING

Whether you are looking for new opportunity or not, networking is a skill that’s valuable to develop, especially in times of uncertainty. While so many people are staying at home in isolation, many will likely appreciate you reaching out. You have to crave connections and you will never know when this might open doors for you.

Conclusion

Organizations that are undergoing restructuring or facing financial difficulties, are environments where employees are more likely to feel that their jobs are vulnerable to being cut. This can have serious detrimental impact on their physical and mental health, as supported by meta-analytical reviews and longitudinal studies. Managers should engage in greater and more meaningful communication with their employees and clarify expectations of them if they wish to reduce job insecurity. By effectively communicating with employees and given them an idea of what they can expect in terms of their jobs, managers will be better able to reduce employees’ apprehension about the contribution of their employment.

Although maintaining open dialogue and sharing meaningful information in order to increase organizational communication and reduce role ambiguity and conflict are certainly within the control of management, many of the predictors of job insecurity identified are not easy for managers to change. Yet simply having an understanding that these subjective and objective characteristics of individuals are related to feelings of job insecurity can help management know, how to proactively target their efforts to help employees. For example, knowing that younger employees and those in blue-collar jobs are likely to feel greater uncertainty regarding their continued employment should help managers improve their communication efforts.

Of course, the onus is not solely on management to reduce employee insecurity. Employees must make concerted efforts to proactively manage their psychological contracts by figuring out what the organization plans to provide. By talking with the peers and managers, employees can resolve conflicts, reduce ambiguities, and make themselves more aware of changes that may be on the horizon. In short, they can proactively reduce any unnecessary ambiguity and keep job insecurity to a minimum. While it is probably unrealistic to think that job insecurity will be entirely eliminated, it can be reduced. In doing so, the negative consequences associated with job insecurity (such as poorer health, negative attitudes, and lower job performance) can be mitigated.

 

ABOUT THE AUTHOR

ROBERT OWUSU is a Fellow of the Chartered Institute of Bankers (Ghana). A seasoned banker with wide experience in Retail Banking, Internal Auditing, Project Management, Electronic Banking with a high speciality in Internet Banking. He is also a Consultant and a Supervisor of the Chartered Institute of Bankers (Ghana) examination.

CONTACT

E-mail addresskwa [email protected]; Tel. 0240 821597 & 0546 907904

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